The Indian government recently amended its power export guidelines, allowing Adani Power to sell electricity, originally meant for Bangladesh, in the domestic market. This change, reported by Reuters, comes in response to the political turmoil in Bangladesh, which has affected the power supply arrangements.
The amendment is seen by some as a protective measure for the Adani Group, a politically connected conglomerate, against disruptions in Bangladesh. The Modi government had initially framed guidelines in 2018 for power generators supplying electricity exclusively to neighboring countries. Currently, only Adani Power’s 1,600-megawatt plant in Godda, Jharkhand, supplies its entire output to Bangladesh.
An internal memo from the Union power ministry, dated August 12, updated the 2018 guidelines, allowing the government to permit the connection of such generating stations to the Indian grid. This would enable the sale of power within India if there is a sustained reduction in demand or delays in payment from the neighboring country.
Adani Power’s agreement with Bangladesh has been controversial, with critics arguing that Dhaka is purchasing electricity at excessively high prices. The deal, signed in 2017, was preceded by a memorandum of understanding between the Adani Group and the Bangladeshi government in 2015, shortly after Prime Minister Narendra Modi’s visit to Bangladesh. Opposition parties in India have questioned Modi’s involvement in the deal, suggesting possible ulterior motives.
In 2023, the Bangladesh Power Development Board (BPD) requested a revision of the agreement, arguing that the coal price quoted by Adani Power was excessively high. The BPD noted that the quoted price of USD 400 per metric ton was significantly higher than the USD 250 per metric ton being paid for imported coal at other Bangladeshi thermal power plants.
The amendment to the power export guidelines is timely, given the ongoing political upheaval in Bangladesh. Former Prime Minister Sheikh Hasina has reportedly fled the country, and an interim government is now in place. Despite this, the risks of political instability remain, which could further impact the power export arrangement between India and Bangladesh. The new rules provide Adani Power with a safeguard, allowing it to redirect its electricity to the Indian market if the situation in Bangladesh continues to deteriorate.
